Donations for More than Just Diplomas: Conservative Philanthropy and American Higher Education

Editors’ Note: Elizabeth Shermer joins HistPhil‘s forum on the history of conservatism and philanthropy.

Private giving has been instrumental in American higher education’s development. Especially before state and federal governments started spending more on college and universities during the Cold War, philanthropy served as a major source of financial support for those institutions. Yet conservative donors, especially those with corporate ties, have generally been overlooked in accounts of the storied post-World War II expansion of American higher education.

Their gifts represented a critical moment in the history of conservative philanthropy because business leaders and elite educators used support from major philanthropic organizations to raise tax-deductible corporate donations. Though their contributions may have seemed to be in the spirit of growing efforts to expand higher education, benefactors also intended gifts to subvert liberal Republicans’ and Democrats’ efforts to increase state funding for higher education and expand public postsecondary schooling options.

Though the country is now famous for its numerous state schools, private schools once dominated American higher education. Local, state, and federal governments had offered some support to public institutions before 1900 but tuition revenue, business support, and philanthropy provided far more income for a wide range of public and private postsecondary institutions.

These schools nevertheless had tenuous finances since donors and legislators tended to be capricious. In the 1880s, for example, the University of Louisiana became private Tulane in recognition of prosperous dry-goods merchant Paul Tulane’s gifts to keep supporting the struggling institution. North Carolina’s private Trinity College was rechristened Duke University after tobacco and utility magnate Buck Duke created the expansive endowment intended to save the school, improve his public reputation, and protect his business empire. Lacking such benefactors, many public and private colleges failed, though historians have struggled to estimate the exact number that did not make it into the new century.

The financial insecurity of many of the 700 schools still operating in 1900 shaped how foundations, most notably the Rockefeller Foundation’s General Education Board and the Carnegie Foundation for the Advancement of Teaching, used their millions to improve the quality of education at, and finances of, the strongest Progressive-Era schools. Enrollments, state earmarks, and gifts steadily increased after World War I, yet hundreds of schools still struggled to remain open in the 1930s when applications, state allocations, and gifts plummeted.

Many historians consider the Great Depression the seedbed for American higher education’s rapid, storied postwar expansion. The Roosevelt Administration never offered a New Deal for higher education but the National Youth Administration spent $93 million on a work-study program that sent more than 600,000 young people to schools that desperately needed students who could pay fees, improve campuses, and staff offices. FDR also signed into law the celebrated 1944 Servicemen’s Readjustment Act. The so-called G.I. Bill’s educational guarantees helped more than 2 million veterans go to college. Legislators across the country started to spend more on higher education even before the Soviets launched Sputnik, a scientific feat that terrified voters and finally broke an almost decade’s long Congressional stalemate between liberals and conservatives over federally-funded higher education. Many experts consider the 1958 National Defense Education Act’s undergraduate loans, graduate-student grants, and funding opportunities for math, science, engineering, and foreign language programs a prelude to the 1965 Higher Education Act. That legislation’s funding for universities, libraries, and student assistance programs helped make mass higher education a reality.

Philanthropists, CEOs, conservative politicians, and elite educators rarely make an appearance in that oft-invoked, rose-colored narrative. They nevertheless shaped how higher education expanded because they fought increased state investment in postsecondary schooling, which started to become a liberal cause during the New Deal but did not become a critical component of postwar liberalism until the mid-1950s.

Indeed, preserving federalism was just as important to a network of philanthropists, CEOs, conservative politicians, and top academics like Harvard’s James Conant, the University of Chicago’s Robert Hutchins, and Columbia’s Nicholas Murray Butler, as was improving higher education’s precarious finances. They also sought to defend what they considered the tradition of the private funding of the nation’s higher education system. For example, Conant, Hutchins, and Butler, all feared that federal funding would come at the expense of academic freedom and institutional autonomy. Conant warned that “to coerce” the academy through 1930s federal bailout programs “is to enslave it.” He even cautioned Eisenhower against the range of proposals included in the early drafts of the National Defense Education Act.

Some renowned professors, conservative politicians, and leading executives also wanted to keep higher learning exclusive and disliked liberal efforts to nurture mass higher education. Hutchins, whose fervent, longstanding defense of the humanities gave him a reputation as a liberal, even predicted that the G.I. Bill would turn colleges “into hobo jungles.” Conservative postwar lawmakers, like Arizona Senator Barry Goldwater, also opposed federal involvement. He wanted Americans to stick with the tradition of leaving education and its funding to churches, private benefactors, and states. That tradition especially appealed to Southern lawmakers, who fought the civil rights protestors demanding an end to longstanding discriminatory admissions policies that many elite schools sought to maintain. A growing number of top businessmen also feared how much the federal government had grown and expanded its power since the 1930s. Some CEOs even disliked how much money legislatures increasingly spent to give citizens cheaper public higher education options in the 1950s when most postsecondary institutions remained private.

Tax-deductible corporate contributions were an overt weapon in this postwar power struggle, particularly over higher education. That arsenal relied on AP Smith Manufacturing Co. v. Barlow, a 1953 New Jersey case upholding the legality of a firm’s $1,500 donation to Princeton. The unanimous ruling did not emphasize corporations’ ability to reduce their tax liabilities but instead emphasized that this decision would enable philanthropists to protect private schooling, which was deemed essential for the preservation of the capitalist system. “The only hope for the survival of the privately supported American college and university,” jurists held, “lies in the willingness of corporate wealth to furnish in moderation some support to institutions which are so essential to public welfare and therefore of necessity, to corporate welfare.” The judges concurred that there was no “greater benefit to corporations in this country…than to build and continue to build, respect for and adherence to a system of free enterprise and democratic government, the serious impairment of either of which may well spell the destruction of all corporate enterprise.”

Journalists celebrated the ruling and legislatures across the country soon amended their tax codes but executives, academics, and the Ford, Carnegie, and Rockefeller foundations put it to use through the Council on Financial Aid to Education (CFAE). Those foundations, along with the Alfred P. Sloan Foundation, initially started CFAE in 1952 in order to expand their efforts to study private postsecondary schooling’s precarious financing. They intended CFAE to be a clearinghouse for information about and advice on privately underwriting postsecondary schooling in order to keep it affordable for the growing number of Americans who both needed and wanted more education.

The corporate executives involved incorporated CFAE into their general war against postwar liberalism. Alfred Sloan, the long-serving reactionary president of General Motors, had established his eponymous foundation in 1934. Sloan was also one of the many right-wing CEOs involved with redirecting CFAE’s energies toward undermining liberal efforts to increase state and federal spending on higher education. CFAE’s board, for example, included twelve school presidents and sixteen leading CEOs. Many of the college administrators had business backgrounds, including CFAE’s first president, Wilson Compton. The Wooster College alum and Princeton Economics PhD had headed the National Lumber Manufacturers Association for almost twenty-five years and helped manage the American Forest Products Industry for twelve. The executives involved also had longstanding connections to top private universities and leading philanthropies. Standard Oil Company board chairman Frank Abrams, for example, had spent years as a Syracuse, Sloan Foundation, and Ford Foundation trustee.

Abrams considered himself “just an ordinary business guy that got shoved into…a Billy Sunday meeting.” CFAE needed fervor on par with the budding conservative movement because surveys revealed that most executives and stockholders resisted generously supporting higher education unless the business benefits were clear. As such, CFAE’s executive spokesmen promised a substantial return since gifts would reduce tax bills, state revenues, and therefore government spending. Donations also implicitly protected “the whole spectrum of voluntary associations,” a GE executive explained, which made corporate gifts good business investments, not just charitable acts. Benefactors also had the chance to stave off current and future tenured radicals, Abrams suggested, since money would help strengthen faculty’s “belief in the American system of democratic capitalism.”

CFAE staff also emphasized that business support would help stop further federal interference in schooling and that donations might ensure that private schools remain at the helm of higher learning. Steel magnate, Yale alum, and CFAE stalwart Irving Olds considered these elite schools’ leadership imperative since “Capitalism and free enterprise owe their survival…to the existence of our private, independent universities.” “We are through,” he feared, “If the day ever comes when our tax-supported competitors can offer the youth of America a better education…and at a lower price.”

Colleges had a mixed reaction to CFAE’s efforts. Many private schools celebrated donors and shared their convictions. The Harvard Alumni Bulletin, for example, told graduates that corporate giving might curtail increased taxing and spending. Editors insisted, “Washington…should not be saddled with the task of raising tax money for the benefit of the privately supported colleges and universities which historically have proved such important counterpoises to our public institutions.” State-school administrators, on the other hand, like University of Vermont personnel, considered both their Ivy-League counterparts and their CEO allies to “have been carried away by their zeal to the extent that they have invoked the blessings of God, Country, and Private Enterprise.”

Despite CFAE’s best efforts, executives weren’t generous enough. Staff did note that 207 companies’ donations rose from almost $34 million in 1956 to just over $50 million in 1960. The average annual contribution jumped from roughly $164,000 in 1956 to just over $234,000 in 1960. Yet only a slice of the country’s business community donated, mostly firms in the transportation equipment, chemicals, oil, electronics, and primary metals sectors. And more giving didn’t substantially increase the number of schools helped. In the 1954-55 academic year, corporations had given $40 million to 728 institutions. Less than a decade later, executives gave three times as much (more than $147 million) but only extended that generosity to an additional 300 schools (1,036 post-secondary institutions).

By 1960, CFAE surveys indicated that both companies and colleges did not fear government funding as much as they once did. The National Defense Education Act had not, after all, provided the earmarks needed to fully underwrite schools or students, guaranteeing a continued place for private philanthropy in funding higher education. Moreover, that legislation had left the administration of the graduate-student grants and undergraduate loans to campus financial aid personnel.

By 1964, even Conant conceded that the nation might need a more coordinated, public-private approach to higher learning. He hoped it would emerge out of state experiments, like former Roosevelt-Administration labor economist and University of California president Clark Kerr’s celebrated Master Plan for California postsecondary schooling. Conant considered it a model for states like New York desperately trying to preserve private schools and expand public options in the 1960s.

Even though philanthropists, businessmen, and elite educators couldn’t raise enough money to fund much-needed university expansions, keep fees down, and ensure private schools stayed open, their efforts had a lasting impact to the extent that they impeded robust public funding of higher education. In fact, though Kerr’s vision for government-supported higher education loomed large over the debates to include funding for universities in the 1965 Higher Education Act, Kerr had to turn to private philanthropy to support his plan, because the state and federal funding it received was insufficient.

Since then, neither state legislatures nor Congress has ever allocated enough money to keep tuition rates in check nor administrators from needing sizeable donations to maintain their facilities, improve resources, and grow. In recent decades, federal and state spending has declined, donors have remained capricious, tuition rates have soared, and five schools a year close on average. It is difficult to know whether the mid-century donors behind CFAE would consider this mounting crisis a victory.

-Elizabeth Shermer

Elizabeth Tandy Shermer is an associate professor of history at Loyola University Chicago. She has published op-eds, academic articles, book chapters, edited collections, and the book, Sunbelt Capitalism: Phoenix and the Transformation of American Politics. She is currently working on two new books on the privatization of American public higher education, entitled The Business of Education, and a history of the student loan industry, tentatively titled, Indentured Students.

One thought on “Donations for More than Just Diplomas: Conservative Philanthropy and American Higher Education”

What is Professor Shermer’s evidence that James Buchanan Duke endowed Duke University either to “improve his public reputation” or “protect his business empire?” I write about Duke’s giving in HOW GREAT PHILANTHROPISTS FAILED AND HOW YOU CAN PROTECT YOUR LEGACY, and I find no evidence for either assertion. Duke’s reputation was never a national issue, and his “business empire” in 1924 was the company that is the ancestor of Duke Energy, which, unlike his tobacco business, was never under any regulatory threat. .